By Tony Udemba
The Managing Director/Chief Executive Officer, Laurel School of Mines, Mr. Tope Adebanjo, has made case for the provision of multiple sources of funding at low interest rate to boost exploration and development of the mining industry. The mining expert and international gemstone trader in this interview, commended the Bank of Industry (BoI), for its leading role in the promotion of entrepreneurship, youth empowerment and wealth creation in Nigeria.
Adebanjo spoke on the nationwide gemstones training collaborations with BoI, how to boost investments and production activities in the sector, as well as challenges and other topical issues concerning mining in Nigeria.
Mining in Nigeria
Risk evaluation is a reality of life in the mining world. Before spending money on new projects, investors and bankers want to know what risks are attached to the geology of a certain prospect or the availability of infrastructure in a particular mining area. The condition of the market into which the developer hopes to sell his commodity is yet another concern. Simmering civil unrest also undermines investors’ confidence. There are also capital considerations.
Another factor that may affect investor sentiment in Nigeria’s mining industry is AIDS. However, while the alarming infection’s statistics are readily available, the impact on the mining industry seems to be a well-kept secret apart from generalisations and projections.
The difficulty of getting estimates particular to the mining industry and the potential effect on operations has resulted in a big debate.
Global trends
As the world faces the challenges of the millennium, more and more countries are embarking on major restructuring of their economies in order to derive maximum benefits from the various economic sectors.
However, it is obvious that economic indicators point towards global trade in solid minerals. The economic exploitation of the mineral resources of a country is normally given considerable attention by the government of the country endowed with such resources. That Nigeria is well endowed with a vast array of mineral resources is a well known fact. It has been confirmed that all the states in the country have at least one economic mineral.
But till date only oil and gas have been produced in the country substantially for export as well as for local consumption despite its large area, population and vast mineral resources. Simply put, the exploitation of oil and gas has over the years become the main source of the country’s revenue generation.
When compared with its huge solid mineral endowment, it is shocking that only few partially functional earth resources-based industries, specifically the cement factories, can be identified in the country and there is no doubt that much more can be done if only the resource base for mineral-based industries in the country can be properly harnessed.
Nigeria is endowed with abundant mineral resources of various kinds. There is local and international demand for mineral resources, which provide substantial trade and investment opportunities for both local and international investors.
What is obvious is that the business community is largely ignorant of the economic potential existing in Nigeria’s solid minerals sector.
It is even more worrisome looking back at the World Bank’s report of October 5, 2012, which stated that Nigeria’s oil production will come to an end in 41 years.
Nevertheless, the way out is, before the sun completely sets on oil, let’s confront the future and unlock the potential in solid minerals and metals.
Apart from minerals and metals, the agricultural sector of the economy needs to be more purposefully harnessed. It is surprising that agriculture today contributes less to the economy than it did in the 50s and 60s. Indeed, agriculture was the mainstay of the economy at that time, with the groundnut pyramids, cocoa, oil and palm.
Solid minerals potential
The development of the Nigerian mineral resources will significantly increase non-oil contribution to the national economy. The critical measures that can propel an orderly and rapid development by the private sector include, providing a solid foundation for mineral exploration and development through effective acquisition, interpretation, storage, management and communication of geo-science data and providing a robust and updated national geo-science database will encourage detailed evaluation of mineral prospects by junior mining companies. The activities of the exploration companies will lead to the delineation of known resources and the discovery of more deposits nationwide. The licensing regime that is transparent, efficient and managed by an independent and modern Mining Cadastre Office will improve investor confidence and increase funding to the sector.
Also, it is strategic to facilitate access to sources of funding at low interest rate for exploration and development of mineral resources. Such sources of funding include Solid Mineral Development Fund, Natural Resources Fund, Multilateral and Bilateral Funds, Venture Capital and Equity Funds and Capital Market. Boosting local production in other sectors of the economy will boost the demand for solid mineral raw materials. More activities in Oil and Gas exploration will increase the demand for Barytes and Bentonite.
Massive agricultural activities will increase the demand for fertiliser, which requires phosphates and other non-metallic minerals for its production. Reviving the iron and steel industry will create huge demand for minerals required in steel production such as iron-ore, dolomite, limestone, zircon, among others.
It is pertinent to note that before oil became the mainstay of the economy in the mid-1970s, solid minerals and agricultural commodities accounted for almost all of the country’s exports. The tin mines of the central Plateau region around the city of Jos and the coal mines around the southern city of Enugu had been opened up by the late 19th Century. But tin production is now down to a trickle, while coal exports slumped from a peak of 3.2 million tonnes a year in the 1970s to nothing within two decades as successive administrations focused on the oil boom of the 1970s and early1980s.
According to the Ministry of Mines, coal export or usage for electricity generation is capable of earning or saving Nigeria up to $6 billion per annum. Applying our coal to generate electricity would yield 7,000mw, which can be the national base load, supplemented by other sources for the next 30 years. There are large deposits of talc spread across the country that have the potential to earn about $3 billion annually.
Proven reserves of good quality coal low in sulphur and ash are put at 2.75 billion tonnes. Deposit of iron ore is estimated to exceed 3.2 billion tonnes. Bitumen reserves, put at over 4.5 billion tonnes, are nearly double the known reserve of crude oil while the deposits of gold and other gemstones, including sapphire, aquamarine, emeralds, topaz, tourmaline, citrine, amethyst, etc., are said to occur in viable commercial quantities in different parts of the country. We have industrial minerals, such as barites, bitumen, kaolin, gypsum, salt and iron ore, among others, that could bring substantial foreign earnings.
Therefore, if properly harnessed and given the full support of the government, the mining sector has the huge potential of overtaking the oil and gas sector, to become the major revenue earner for the nation. I have no doubt in my mind that all things being equal, the possibility of realising it may not be too far.
Transformation of mining industry
Apart from establishing a world-class mining institute here in Lagos, with modern classrooms, laboratories and facilities that offer comprehensive lectures and practical trainings comparable to what is obtainable in the developed world, we also run the Young Miners Club Africa (YMCA), which targets kids between the ages of 13 and 19 years. The mission is to provide young people with the skills and support they will need to identify their specific career interest in mining as business.
Also, the LSM Investors Club, which was set up by our organisation is open to everyone who wants to explore the investment opportunities of the mining industry. The programme provides a non-technical introduction to mining and mineral processing and serves as an introduction to mining investment. It is designed for investors and other stakeholders requiring a background to mineral exploration and mining.
Our LSM Basic Gemstone Training (SMEs Programme), which is a basic training course/SMEs programme for an intense gemological programme, offers an ideal practical introduction to gemology with over 10-12 lectures and is aimed at offering participants a broad introduction to gemology by examining coloured gemstones. With this in place, we ensure that basic gemological techniques are learnt in order to identify gemstones and their stimulants with the aim of working with SMEs and launching them into employment.
Collaboration with BoI
Our organisation, Laurel School of Mines (LSM) recently signed a Memorandum of Understanding (MoU) with BoI. The purpose of the agreement is the facilitation of and completion of the Gemstone Training to Trading Programme, which is fully supported by BoI in its drive for capacity development for the mining sector in Nigeria.
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